Teeth-Whitening Company Sues Google, Microsoft, Yahoo, Others

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Teeth-Whitening Company Sues Google, Microsoft, Yahoo, Others

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A dental whitening company that admittedly used deceptive ad campaigns to trick users into signing up for expensive subscriptions is now suing Google, Yahoo and Microsoft for letting competitors run similar ads using its trademarked name.

You've probably seen ads with the mom who discovered the secret to whiter teeth, though, she doesn't exist – she's just a marketing lie. But she's just the tip of the iceberg when it comes to dodgy advertising campaigns that promise a free trial yet end up subscribing people to dental products, get-rich-quick schemes involving working from home on Google, diet supplements and the like.

The short story, according to the complaint, is that DazzleSmile paid its ad agency Epic $43 per order generated by advertising designed to mislead consumers into signing up for trials or free samples, when in fact they were signing up for expensive monthly subscriptions to the products.

When Dazzlesmile and its parent company Optimal Health Science decided to become squeaky clean and ceased their dealings with Epic, Epic allegedly continued to run the ad campaigns, according to the suit. But the new ads were funded by a Canadian named Jesse Willms, who allegedly operated infringing websites including DazzleSmilePro.com and DazzleSmilePure.com – both of which have since been removed (see screenshot). Dazzlesmile LLC is also suing Epic, Willms and AtLast, which filled the orders, for trademark infringement among other things.

Dazzlesmile also says the big three search engines knew these ads infringed on its trademarks, but allowed them to run anyhow.

"Although Dazzlesmile has sent a cease and desist letter to Google, Yahoo, and Microsoft, searches on those Defendants' websites for 'dazzlesmile' or 'dazzle smile' still provide sponsored search results directing consumers to Epic and the Willms Defendants infringing websites, thus creating actual consumer confusion, indicating that Defendants Google, Yahoo and Microsoft have continued allowing Epic, the Willms Defendants and their affiliates to bid on the keywords 'dazzlesmile' and 'dazzle smile' in order to confuse and misdirect consumers," the complaint reads.

Yahoo did not immediately respond to a request for comment, while Google and Microsoft declined the opportunity.

But the suit could make them become more vigilant about the ads they run, including ones that could be potentially trademark violations. That's been a particular tough area for Google since it bases much of its advertising off of keywords that advertisers bid on.

And while lawsuit does not take the search engines to task for running deceptive ads – just infringing ones – it could lead to stronger efforts to address the deceptive "negative option" advertisements that Better Business Bureau spokeswoman Alison Southwick called "a scourge of the internet" during a wired.com interview last month. The "negative option" is a sales technique that gives you a free trial but requires you to opt-out of an subscription, rather then choose to join.

Legions of companies advertise through several ad networks on these search engines, so it's understandable that they may not notice when one company advertises websites that are suspiciously similar to another company's name. As far as deceptive advertising, the search engines say they already try to root it out – although their job is made quite difficult by advertisers switching their names, product names, domains, websites and ad networks after they face scrutiny. (For instance, one of the companies named by this lawsuit appears still to be advertising on Google as of today.)

Google search quality team member Jason Morrison wrote in July, "At Google, we work hard to protect users from these schemes by using a combination of automated and manual tools that remove them from our search index and ad network." Last month, Yahoo told us it wass implementing "more-stringent editorial decisions about display-ad content" and Microsoft said it was "aggressively combating online ad fraud."

In addition to accusing the search engines of running infringing ads, the complaint (.pdf) names a slew of parties as defendants: Dazzlesmile LLC's former advertising agency Epic Advertising, a.k.a. Azoogle.com, AzoogleAds U.S. and Epic/Azoogle; a Canadian named Jesse Willms and his corporation, "1021018," which owns Just Think Media; a Cyprus-based company called Farend, owned by Nomilink Management, also based in Cyprus, with presences in Iowa and Colorado – all of which Dazzlesmile LLC claims are also owned by Willms; AtLast Holdings/AtLast Fulfillment, which shares a Colorado address with Farend and apparently fulfilled orders for the infringing products; and John Does affiliated with Epic Advertising and Willms.

Dazzlesmile LLC's list of accusations against those parties is even longer: 13 counts of everything from unfair competition and trademark infringement to fraud and racketeering.

For most consumers, it doesn't much matter that one company is suing another for copying its products and websites, though Dazzlesmile LLC says it has received over 10,000 complaints about its allegedly-infringing competitors. For them, the more important question revolves around the question of whether search engines and other websites can be held responsible for advertising on their sites – a situation complicated by the net's reliance on ad-network intermediaries to fill ad slots and buy keywords.

Eric Goldman, director of the High Tech Law Institute at Santa Clara University, told MediaPost that the allegations against the search engines likely won't fly, because Dazzlesmile LLC's allegations of "vicarious infringement" against the search engines don't accuse the advertisers of acting as agents of those search engines.

In other words, ad networks such as Epic Advertising could provide a sufficient legal buffer between deceptive advertisements and the sites they appear on. That doesn't change the fact that major websites and search engines continue to profit from these allegedly fraudulent and deceptive "negative option" advertisements – whether they want to or not.

Despite Goldman's skepticism, Dazzlesmile's case against these search engines could be buttressed by Google having settled with American Airlines in July 2008, after the airline complained (.pdf) about competing airlines, travel websites and unrelated third-parties buying Google keywords that were trademarked by American Airlines.

Rules giving safe harbor to search sites don't mean that the feds can't cut through that immunity to strike directly at fraud. The Federal Trade Commission has investigated scores of misleading offers, especially in the second half of 2009. And according to a government sunshine request filed by Wired.com, the FTC received complaints against Dazzlewhite, Dazzle Smile, Dazzle Smile Pro and Farend Services.

As a matter of policy, the FTC does not say whether it is investigating a particular company until an investigation is finished. But it has aggressively pursued other negative option advertisers involved in nicotine patches (Nicocure, Stop Smoking 180, and Zero Nicotine), payday loans (VirtualWorks's EverPrivate Card and Secret Cash Card), supposed government grants (Grants For You Now, Grant One Day and Easy Access Grant), get-rich-quick schemes (Google Money Tree) and discount pharmacy cards (InterBill's PharmacyCards.com).

That history suggests that Dazzlesmile and its alleged copycats have more to worry about than just trademark infringement.